1 Finance Secures SEBI Approval for MF Lite Asset Management
The wealth-tech firm plans to launch passive investment products by late fiscal 2027.
1Regulatory Milestone Achieved
1 Finance has received in-principle approval from the Securities and Exchange Board of India to establish an asset management company. This authorization operates under the new MF Lite framework, which was introduced on 31 December 2024. The firm currently manages over ₹17,000 crore in assets under advice for its clients.
2Strategic Market Entry
The company targets a formal launch in the fourth quarter of fiscal year 2027. This timeline remains subject to completing all necessary operational requirements and securing final registration from the regulator. The proposed AMC will focus exclusively on passive investment products, specifically targeting index funds and exchange-traded funds for investors.
3The MF Lite Framework
SEBI designed the MF Lite framework to lower entry barriers for asset managers specializing in passive schemes. Previously, active and passive funds faced identical regulatory burdens regarding net worth and profitability. By creating a separate, lighter compliance route, the regulator aims to foster innovation and increase overall market penetration for passive products.
4Focus on Passive Investing
Passive funds replicate index performance rather than relying on active manager stock selection. Under the new framework, SEBI has defined specific eligible categories and conditions for these schemes. 1 Finance intends to leverage this structure to provide low-cost, rules-based investment solutions that align with their existing personal finance advisory business model.
5Impact on Competition
The introduction of a dedicated regulatory path for passive-only businesses could encourage new players to enter the market. Increased competition among fund houses might eventually exert downward pressure on costs for retail investors. However, the regulator notes that lower expenses are not guaranteed simply by the entry of new market participants.
6Investor Considerations
While the framework aims to expand product choices, investors must still evaluate key metrics independently. Essential factors include expense ratios, tracking error, and the underlying index composition. For exchange-traded funds, liquidity and trading costs remain critical considerations. Passive funds continue to carry inherent market risks linked to the securities they track.
7Integration of Services
Co-founder Jeet Marwadi emphasized that financial planning and investing are deeply interconnected for their clients. The firm plans to prioritize asset allocation, tax efficiency, and disciplined long-term investing. By bringing investment solutions together with their advisory services, they aim to provide a more holistic financial experience for their growing user base.
8Future Outlook
The in-principle approval represents the initial step in building a new fund house. Investors are currently awaiting further details regarding specific schemes and their respective expense ratios. As 1 Finance moves toward its 2027 launch, the market will observe how these new offerings compare against established passive funds in India.
Original article: mint - money — 1 Finance Secures SEBI Approval for MF Lite Asset Management